envelope system

[moneymom]

helllo,
i have posted a while back asking for some advice on how to start using
the envelopes to help me get back from serious debth. I get paid every
week my paycheck depends on how many hours i work latley i been
doing 40=45 hours i just need to know how to stop living from paycheck
to paycheck and keep some money in my pockets. I thought maybe the
old fashion way of budgeting using envelopes might help me. please can
some one just help me.

[Roupey03]

We are probably going to need a little more info than that.

[sweeps]

Hi moneymom, I'll leave the nitty-gritty for the budgeting gurus, but your first step is to get a handle on your monthly purchases -- down to the last penny. From your mortgage payment all the way down to that candy bar you bought today. Only then can you decide how much of your income to allocate to each expense. Also it will allow you to see which expenses you can reduce or eliminate.

[cbmeeks]

Do you have Excel? It can really help. If so, let me know and I can show you how to get a good spreadsheet going.

[DebtManWalking]

Mornin' Everyone!

Agree with Sweepsplayer, it is absolutley crucial that you start tracking every single penny...

Our scenario is this; once we arrive home from the day at work and errands after work, I quickly sit down in front of Money 2006 and put in the day's totals. THEN i quickly look at the month-to-date report to figure out where I am spending to much or just to have a general overview as to where my money goes...

We have lowered our monthly expense from $6000.00+ to just around $4000.00...

That's a drastic reduction, but it can only be ascertained by recording and reviewing just to see where everything is going...

Thanks!

[sakigt]

Since you work 40-45 hours a week, start by budgeting for 40 hours. Any extra can be saved.

[Ima saver]

I have used the envelope system for 41 years and it works for me. First you have to keep track of all of your expenses. Write it down. Put down your house payment, car payment, electric (use the highest bill you have ever received, mine is $160 a month) telephone, cell phone, highest food bill,etc.
Also, you need to record once in a while expenses, like car insurance, house insurance and house taxes. Those three items come to about $5000 a year for me, so I put $100 a week in that envelope and save it until one of those bills come in.
You have to think of everything and still have a misc. envelope for odds and ends that come up.
Don't forget to have a savings envelope and pay yourself first.
Plus, give yourself and spouse an allowance for other misc. things.
I do my budget envelopes once a week, when I cash the paycheck. (monday's)
Twice a month I pay the bills from the envelopes and take the cash back to the bank and deposit it into the checking account.

I agree with budgeting for only 40 hours pay.

[Thrifty Ray]

I use my own virtual envelope system.

Monthly bill money is kept in a checking account that is used ONLY for these expenses.
Periodic expense money is kept in an ING savings account....and I maintain an excel spreadsheet which itemizes the breakdown for all of the expenses/money. (IN and OUT)

I budget so much each week to go into each account and so monthly and periodic bills are always covered.

Same theory as the envelopes...I just don't have money at home- it is safely tucked in an acount drawing a little interest!

[Broken Arrow]

I think working with real envelopes and cash is a very good way to start. Everything is tangible and clear. When you're not sure of an amount, you can simply re-count it.

More importantly, it sets the foundation to evolve your own form of budgeting system. Mine is similar to Thrify Ray's, and like Ray, it's still conceptually no different than the old-fashioned envelopes system, except everything is just a metaphysical set of numbers that determines which portion gets assigned to what bills.

But anyways, I think starting out with real envelopes and cash helps to put those concepts into perspective faster and with less confusion than to jump straight into spreadsheets and fancy softwares, but that's just my opinion.

[Ima saver]

This is funny, but remember I have never used a computer in my life and still know nothing about them. After doing this budget envelope system for over 30 years, I decided to start doing it all on paper and let the money stay in the checking account. I tried it for a few months and I totally got screwed up because of all the book work. I made mistakes. So I went back to the envelope system, keeping the cash in envelopes and depositing the money in the checking account.

[Broken Arrow]

What ever works.

[lillyb]

I'll use what I do as an example of how envelopes works for us. Each payday I deposit dh's paycheck. I have a certain amount of cash I withdraw to fund my envelopes. With the rest I will pay my bills and then whatever's left over I use to pay down debt.

For us I withdraw $300 bi-weekly (dh gets paid every other week). Out of that $300 I seperate to fund my envelopes. $50 blow money each, $150 grocery and other (stuff I'd buy at Wal-Mart, cleaning, pet food, etc.), $50 gas. This is just the amounts we've both agreed to and what works for us. Find what amount works for you or what amount to aim for.

Now, with my envelopes funded for two weeks I'm all set. The bills are paid, I've paid down some debt, and I have cash for the expenses that will come up within the next two weeks before payday. (bear in mind, we have a small emergency fund already funded for emergencies) Now, since I've got 'x' amount of cash I really tend to watch what I'm spending. And when the envelope is empty, that's it. I'm done. I tend to be really careful with gas usage and work harder at reducing grocery expenses.

We've been doing this for 8 months now and it's working great! Hope this helps some.

[boefixepa]

There's an e-book you should be able to download from somewhere called 'Money 4 life.' It details how to track your spending, like all the other's mentioned, and how to set up your envelopes. It is associated with mvelopes, an online service, but I'd keep it simple at first like suggested and just do it with cash and real envelopes. Really writing down and tracking your spending is the hardest part, but the most necessary. It's a bit of work up front, but more than worth it. The hardest part for me was not stealing from one envelope when I ran out in another. It's really about discipline and not lying to yourself about spending more than you should. Goog luck.

[Ima saver]

I have done it for so long that I am hardly ever tempted to steal (or borrow) from an envelope. If I really really need to, (like my husband needs his gas money early), I put a post it note on that envelope that says, iou and the amount!

[lovingyoualways]

found this site haven't really looked at it yet though hope it helps http://www.envelopebudgeting.com/

[The Budget Man]

Originally Posted by moneymom

helllo,
i have posted a while back asking for some advice on how to start using
the envelopes to help me get back from serious debth. I get paid every
week my paycheck depends on how many hours i work latley i been
doing 40=45 hours i just need to know how to stop living from paycheck
to paycheck and keep some money in my pockets. I thought maybe the
old fashion way of budgeting using envelopes might help me. please can
some one just help me.

3.

Congratulations on being ready to have a go at budgeting. Envelope systems were a great way to budget when we were paid in cash. I notice that you say you receive a paycheck. I presume this goes to the bank and then the money goes off in all directions, most of it not being seen as cash.

Here's the problem .... cash budgets are great with envelopes. However our banking has become too complex for them to work.

Here's an idea that works. There are only three places you can spend money...

1. Day-To-Day living such as groceries

2. Bill Paying - most of this by cheque or other bank based payments

3. Savings

This means that the first step in any budget is separating the expenses and having an account that looks after the bills and a second account that looks after the Day-To-Day expenses.

This is the easy way of moving from an envelope budget to a budget that works with the way we are paid.

Enjoy Your Money
The Budget Man

[Ima saver]

I have to disagree. I have never been paid in cash. I write a check out to pay my husband. I go down to the bank and cash it, bring the cash home and put in into the respective envelopes that I have set up for my budget.
I started this system in 1965 when I first got married and it still works for me. The first item on the budget and the first envelope is, "pay me first" (savings)

[kristinecfp]

Originally Posted by boefixepa

There's an e-book you should be able to download from somewhere called 'Money 4 life.'

You can find the ebook at www.mvelopes.com. Scroll down about halfway ~ located on the left menu.

Mvelopes is an electronic envelope system. I don't use it myself, but know several people who use it and have had good results with it.

I personally prefer lillyb's approach, where you use envelopes for certain areas, such as groceries, entertainment, etc. and use the rest of your paycehck to pay bills, paydown debt and save.

The most important thing is to find the system that works for you.

Best wishes,
Kristine

[Ima saver]

I think that is the key, you have to find out what works for you and stick to it.

[The Budget Man]

Originally Posted by Ima saver

I have to disagree. I have never been paid in cash. I write a check out to pay my husband. I go down to the bank and cash it, bring the cash home and put in into the respective envelopes that I have set up for my budget.
I started this system in 1965 when I first got married and it still works for me. The first item on the budget and the first envelope is, "pay me first" (savings)

The best system is always the one that works. Envelope based systems are perfect for cash or cashed cheques as you've proved in being able to use one successfully since 1965.

Neither of my adult children use cash or cheques. (I still do at times but those times are becoming less and less frequent.) The married daughter doesn't even have a cheque book.

If your budgeting is not cash based you need an alternative to envelopes. This is one of the reasons why people are struggling with trying to find budgeting methods that work for their way of banking.

Enjoy your income
The Budget Man

www.PersonalityBudgeting.com